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Option Brief: Despite strong November sales, General Motors Company (NYSE:GM) lost 2.5% yesterday. At the same time, the car company experienced an influx of option trades, with volume finishing at four times the daily average.
During the morning hours, the largest trade -- according to data from Trade-Alert -- was the initiation of a collar. Specifically, a GM stock owner bought to open 26,662 March 2014 33-strike puts, while simultaneously selling to open a matching number of March 2014 37-strike calls.
Meanwhile, in the afternoon, one speculator expressed bullishness in the shares by rolling up and out his long call position. Digging deeper, about 10 minutes before the closing bell, a 23,849-lot of December 37 calls crossed the tape at the bid price -- suggesting it was sold -- and a 28,500-lot of January 2014 39-strike calls changed hands above the ask price -- suggesting it was purchased. Open interest fell and surged at the respective strikes overnight, indicating the lower position was closed while the higher was opened.
In so doing, yesterday's bull is counting on GM shares to topple the $39 mark ahead of January options expiration. With the stock up 2% this morning to trade at $38.90, the option is very close to moving into the money. However, even if General Motors Company (NYSE:GM) fails to make the modest advance, the most the speculator has on the line is 100% of the premium paid.